Readers of this website are well aware that for more than three years the American Car Rental Association (ACRA) has rode the flag into legislative battle to prohibit the rental of vehicles under open recalls. That fight continues. The recall bills have not yet passed, though the major rental companies have pledged to abide by the tenets of the recall bills and ground recalled rental vehicles immediately.
During that time, personal transportation has experienced a paradigm shift on the back of another horse, the peer-to-peer sharing economy, in the form of transportation network companies (TNCs, or rideshare companies) such as Uber and Lyft.
Total revenue for Uber in 2012 was a blip on the radar. In 2015, Uber is expected to generate $10 billion. Uber is the poster child for market disruption — inherent in its business model is to “ask for forgiveness, not permission.” Instead of going through layers of bureaucracy before setting up shop, Uber opens a market, let’s the public understand the power of the model, and then works to solve the layers of legacy regulatory challenges.
One challenge that isn’t getting much press is the potential for TNC drivers to be driving vehicles with open recalls. What might that universe look like?
Collectively, Uber and Lyft employ roughly 370,000 drivers in the U.S. today. At this time, the open safety recall rate for private-party vehicles is running about 22%, according to Ross Macdonald, chief marketing officer for AutoAp Inc., a recall notification service. Factoring in Uber’s vehicle requirements for their drivers, “Our research found that 22% of private-party vehicles with open safety recalls was from the same vehicle age pool as the majority of Uber's areas of operations require (2000 or newer),” he writes.
UBER and other TNCs don’t publish the VINs for their driver vehicles, so lacking a sample VIN list from a TNC to verify, it would be difficult to get an accurate open safety recall rate for their vehicles in operation, Macdonald says. But, because they use private-party vehicles that are generally model year 2000 or newer, a conclusion could be drawn as to the potential number of TNC vehicles with unrepaired recalls.
Factoring 22% into the TNC universe would put the potential number of vehicles with open recalls at about 81,400. If drivers for TNCs followed general completion rates for recalled vehicles, then 80% of those vehicles would — at some point — get fixed, though a large percentage could be driving around for months with an unfixed open recall. And, following this logic, more than 16,000 TNC vehicles may never get repaired.
Both Uber and Lyft require their drivers to pass company-specific vehicle inspections, though they don’t require their drivers to repair vehicles with open recalls. You’d think that those tasked with transporting the general public would have a greater impetus to fix the recall issue on their vehicles. But should this be left up to chance?
Making sure recalled vehicles are repaired as soon as possible is no easy task, especially in this unprecedented era of “runaway recalls.” And there are inherent flaws in today’s recall notification process. But that shouldn’t stop individual drivers — and the companies that employ them — from accessing NHTSA’s publically available database (www.safercar.gov) to see if his or her vehicle has an open recall and fix the problem.
Uber’s spectacular growth speaks to the larger issue of regulation in the sharing economy. On certain thorny regulatory issues, TNCs have taken the position that they’re technology companies merely facilitating a transaction between two separate parties. As ACRA points out, we need to all work together to modernize the regulatory structure.
Uber and Lyft may have built a better mousetrap, but that doesn’t give them a pass when it comes to the safety of the general public they serve.
Originally posted on Business Fleet